86 As noted at [3] and [14] above, on 23 February 2007, the Supreme Court ordered by consent that:
An account be taken of the Partnership, limited to the dealings and transactions of the Partners with the Partnership.
87 I think it clear that the scope of the Supreme Court Proceeding was limited by reference to the assets and liabilities of the Later Partnership and of the parties to it. This included identification of the property of the Later Partnership (as distinct from the separate property of the individual partners); the incomings and outgoings of the Later Partnership; and unsatisfied liabilities of the Later Partnership and the dealings by the Partners with the Later Partnership.
88 The only claim made by the applicants in the present proceeding that might be said to be of a kind to fall within the scope of the taking of partnership accounts is the claim for the originating fee of $250,000. Upon analysis, however, that amount never became payable for the reason that the time for payment of it, namely "as soon as possible … provided that the Venture [was] likely to return a profit at least equal to $250,000" never arrived. In fact the applicants refer to that sum of $250,000 merely as a particular of the loss and damage suffered by reason of the respondents' conduct for which general damages are sought.
89 The present proceeding is a claim for general unliquidated damages, not a claim for any particular liquidated amount (see [63], [75] above). It may have been reasonable for the claims in respect of both the Earlier Partnership and the Later Partnership, including the present applicants' claim for general damages made in the present proceeding, to be wrapped up together in the Supreme Court Proceeding which would, in that event, have gone far beyond the taking of accounts in respect of the Later Partnership. It cannot be said, however, that any of the claims made in the present proceeding could only have been properly advanced in the Supreme Court Proceeding.
90 I therefore do not accept the respondents' first ground of attack on the present proceeding.
91 I turn now to Anshun.
92 According to Anshun, the question to be asked in Australia in relation to the respondents' second ground of attack is not whether the claims advanced in the later proceeding "could" more conveniently have been advanced in the earlier proceeding. The test is not whether it would have been more efficient and less wasteful, in terms of judicial and other resources, if the issues in the later proceeding had been made the subject of the earlier proceeding.
93 Anshun itself was a case of inconsistency between the determination of the earlier proceeding and the making of a claim in the later proceeding - a circumstance that does not attend the present case. In Anshun, a workman was injured in the course of his employment when a load of girders handled by a crane being used by Anshun Pty Ltd (Anshun) and hired from the Port of Melbourne Authority (Authority) struck him. Under the crane hiring agreement, the Authority enjoyed an indemnity by Anshun in relation to any injury arising directly or indirectly out of the use of the crane during the hiring period. The workman sued the Authority and Anshun. They claimed contribution from each other. The Authority's contribution notice, however, did not claim the indemnity. In the earlier proceeding, judgment was entered in the action against both defendants with costs, and it was ordered that Anshun should recover from the Authority contribution to the extent of 90% and the Authority from Anshun to the extent of 10% of those damages and costs.
94 In the later proceeding, the Authority sued Anshun under the indemnity agreement to recover the amounts that the Authority had paid as damages and interest and for legal costs and disbursements. The primary Judge ordered that the Authority's proceeding be perpetually stayed on the ground that the Authority should have pleaded the indemnity in the earlier litigation.
95 It will be seen that the determination of the cross-claims in the earlier proceeding decided the question of the extent of the liabilities inter se of Anshun and the Authority. It would be inconsistent with that determination for the Authority to be held entitled to recover 100% in the later proceeding. As Gibbs CJ, Mason and Aickin JJ noted, in the later proceeding the Authority asserted a right inconsistent with the right asserted in the earlier proceeding.
96 Addressing the failure of a defendant in an earlier proceeding to raise a defence which the defendant seeks to advance as a cause of action in a later proceeding, Gibbs CJ, Mason and Aickin JJ stated (at 602-603):
there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings, e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.
97 The circumstances and issues in Anshun are far removed from those of the present case.
98 In Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332, Brennan and Dawson JJ stated (at 345) that it may be that Anshun is a case of mere issue estoppel. Pertinently for the present case, their Honours said (at 346):
A plaintiff who has an unadjudicated cause of action which can be enforced only in fresh proceedings (Duedu v Yiboe [[1961] 1 W.L.R. 1040, at p.1046] cannot be precluded from taking fresh proceedings merely because he could have and, if you will, should have counterclaimed on that cause of action in a forum chosen by the opposite party in proceedings in which the opposite party sued him. We do not read the majority judgment in Port of Melbourne Authority v. Anshun Pty. Ltd. as holding the contrary, except in a case where the relief claimed in the second proceeding is inconsistent with the judgment in the first: see especially at pp. 599-601. That is not the present case. [My emphasis]
The passage emphasised is applicable to the circumstances of the present case.
99 Another consideration demonstrating the distinctness of the claims advanced by the present applicants from the taking of accounts in respect of the Later Partnership in the Supreme Court Proceeding concerns the capacities in which the present parties sue and are sued. In the Supreme Court Proceeding Mr Carroll and BCPL were parties in their capacities as trustees of different trusts and as partners. In the present proceeding Mr Benson sues not as a trustee and not as a partner. Although BCPL sues as trustee, it does not sue as a partner but in respect of wrongs allegedly done to it outside its role as a partner in a subsisting partnership. Similarly, Mr Carroll is sued not as a trustee and not as a partner, while HCPPL is sued as trustee but in respect of wrongs it is alleged to have done outside its role as a partner in a subsisting partnership.
100 No doubt the Supreme Court Proceeding could have been substantially enlarged (and made much more complex) by the introduction of cross-claims and additional parties. The present point, however, is that the applicants were not compelled to embark on such a course at peril of abandoning the claims that they were advancing in this Court.
101 I will now turn to certain authorities to which I was referred.
102 The present case has some similarity to Sheaffe v Hungerford (1879) 1 QLJ (Supp) 51. In that case the plaintiff and the defendant agreed to enter into a partnership to form and carry on the business of a cattle station. The plaintiff was to provide the grazing country; the defendant 5200 head of cattle by instalments. After supplying some of the cattle, the defendant refused to supply any more.
103 The plaintiff sought:
(1) that the parties' rights and interests under the partnership agreement might be defined;
(2) damages for breach of the agreement consisting of the defendant's failure to send the cattle;
(3) a dissolution of the partnership if any had been created.
104 Lilley CJ said (at 53) in relation to the claim for damages:
The action is substantially for damages, and under the old system the defendant would be entitled to a verdict. But the plaintiff has asked that the suit may be treated as one for the administration of the partnership affairs, and for a dissolution. There are in my opinion sufficient grounds to grant this application, but I need not state them as the defendant does not oppose a decree on this point."
In view of the consent and the absence of reasons on the point, the case is weak or no authority for the proposition that a claim for damages by one partner against another can, let alone should, be dealt with in a suit for the taking of partnership accounts. In any event, the claim for damages was one between the partners alone and was for breach or repudiation of the partnership agreement itself. The complexities to which I have already referred show that the circumstances of the present case are far removed from those in Sheaffe v Hungerford.
105 In Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (3rd ed, Butterworths, 1996) the learned authors state (at [452]):
There is no doubt that the Henderson principle and the Kilbrandon test (a reference to Lord Kilbrandon's remarks in delivering the judgment of the Privy Council in Yat Tung Investment Co. Ltd. v Dao Heng Bank Ltd. [1975] AC 581) apply with full rigour to proceedings for an account. A simple account may be taken at the trial, and where this occurs, the nature of the proceedings may be obscured. A judicial account involves the offsetting of credit items on both sides to reach a balance in favour of one party. The result can only be final if all relevant claims and cross-claims are either brought forward for adjudication or treated as abandoned.
Again, this passage leaves open the question what are "all relevant claims and cross-claims". Clearly, it would not be open to a partner to advance a later claim to recover property that had been treated as partnership property in the taking of accounts or to contend in a later proceeding that the partners' "loan accounts" in the partnership books, on the basis of which the partnership accounts had been taken, were otherwise than what they had been treated as being in the taking of those accounts. The claims for unliquidated damages made by the applicants outside the scope of the partnership are of a different kind.
106 Public Trustee v Kenward [1967] 1 WLR 1062 was also a case of the taking of partnership accounts. The plaintiff was judicial trustee of a deceased's estate. He sued the defendant for the balance found due by the defendant to the estate on an account and inquiry taken in earlier administration proceedings to which the defendant was a party. The defendant had not challenged the Master's certificate in that proceeding. The enquiry before the Master had related to a farming business carried on by the defendant in partnership with the deceased, in whom the farm was vested, and no evidence was adduced before the Master to suggest that the land was not the sole property of the deceased.
107 On the plaintiff's application for summary judgment, the defendant sought leave to defend on the ground that he had a valid counterclaim for a share in the proceeds of sale of the farm land and the income thereof since the deceased's death and for the cost of certain improvements, on the basis that the land was an asset of the partnership. He offered an explanation of his failure to raise this point before the Master on the taking of partnership accounts.
108 Buckley J held that the defendant was estopped by the Master's certificate from setting up the claim that the land was a partnership asset, since an allegation that it was would have been germane to the accounts and enquiry before the Master, which was directed to determining finally what sum the defendant should pay to the estate. At 1067C, His Lordship stated:
I think the question in the present case must be whether it is right to regard the claim which the defendant now wants to raise as something which properly belonged to the subject-matter of the account and inquiry directed by the order of March 21, 1962. If it were a matter which can be said properly to have belonged to that investigation of the relative rights of the defendant and testatrix's estate, then the fact that the defendant, whether it be by inadvertence or accident or as the result of his being unwisely advised or lacking advice, did not raise the point on any of those grounds would be no justification for allowing him to raise it now.
109 Like Anshun, the case raised an issue of inconsistency. Whether the farm was or was not partnership property lay at the heart of the Master's inquiry and must be taken to have been determined by the Master's certificate.
110 The applicants rely on Gordon v Gibbons (1873) 12 SCR (NSW)(L) 40. That case concerned an unincorporated mining company formed under a deed of settlement. In accordance with the terms of the deed, the directors sued a member for calls. It was held (by majority) that the action did not lie because any recovery would be partnership property and the defendant was a member of the partnership. The Court distinguished a claim for damages or money which, when recovered, would be the plaintiff's own property.
111 This case lends support to the applicants. The damages that they seek to recover would not be partnership property but would be their own property (in the case of BCPL, as trustee for the Grantham Project (Trust), but that is beside the point).